Tuesday, December 13, 2011

What Insurers Could Do With Your 'Social Media Score'


By Sheryl Nance-Nash Posted 7:00AM 12/12/11

Here's yet another reason to watch what you say and do online: Insurance companies are already surfing social media sites to get the scoop about their customers, and what their data-miners find may soon be compiled into a new way to rate you as a risk: a social networking score.

Right now, vendors are building tools to automate the process of searching social media. Such technology would allow insurers and other companies to more easily mine data from Facebook, Twitter and other sites, explains Michelle Megna, managing editor of Insurance.com.

And, just as insurers use credit scores as a factor in assigning you to a risk box, that data could be used to create a social networking score, says Megna.


A life, health or disability carrier who is writing a policy would be interested in knowing whether an applicant engages in dangerous activities such as sky diving, shark diving, an appetite for travel to war-torn countries. If the underwriter sees the applicant's Facebook page has tons of photos of them shark diving off the Great Barrier Reef or doing relief work in the Congo, they might change their mind, says Packer. Similarly, if an applicant says he's a nonsmoker, he might have a problem if his Flickr account has photos of him clubbing in South Beach with a cigarette in hand. And if you "Like" Twinkles and Oreos on Facebook, that knowledge of your unhealthy taste in snacks might give pause to a life or health underwriter, explains Mike Fitzgerald, a senior analyst with Celent, a financial research and consulting firm.

It's not that insurers are nosy: It's just business. "They are using social media for due diligence and to verify information so that a risk is properly and fairly rated," says Packer. It doesn't do you any good to be untruthful in your application. If you later make a claim and then the insurance company finds out the truth, the company will have the right to deny the claim or rescind the policy from the date of the original inception, says Packer.


You may not like the idea of being watched so intensively, but there's an upside if you're among the honest. Insurance fraud hurts not only the insurance companies, but everyone, because it adds 10% to the cost of the average policy. If insurers can bust more fraudsters, it could mean that eventually, your policy would take a smaller bite out of your wallet.


Nor is it clear if social media snooping will be done routinely or not. "It's most likely to happen if there are red flags involving a claim. Then an investigator will step in and start looking, and that looking will include social media," says Jeanne Salvatore, senior vice president and consumer spokeswoman for the Insurance Information Institute.


Lastly, says Packer, staying out of the spotlight is easy. When it comes to completing your application or filing a claim, "Be honest."


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